Ex-SEC Official Explains Why NFTs Are an 'Investment Scam'
Date: 2023-07-23 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark said that the non-fungible token (NFT) market is completely manipulated or controlled by deceptive means, and smart contracts cannot provide complete security and ownership
"A fragmentary link to a JPEG file of a 'bored monkey' wearing funny glasses and a bright hat is not a reliable investment, a reasonable means of commerce, or a reasonable path to a financial dream — just like an NFT tweet, no matter who the author is," he wrote.
Due to the unreliability of NFTs, a former SEC employee urged users to stay away from non-fungible tokens as they are an investment scam. He believes that buying "NFTs for entertainment or as a photo" for social networks is possible, but as an investment it is completely useless.
"Although NFTs are supposed to be completely decentralized, in most cases there is no cryptographic relationship between the image pointed to by the NFT and its token. The image can be easily changed or replaced if people who have access to the servers change the file names," he stressed.
Stark Ask Not to Believe Celebrities
According to Stark, the collapse of the NFT market has already occurred, despite countless advertisements from celebrities. They "blatantly exploited their fans by shamelessly selling these meaningless fractional JPEG links as a prudent path to financial success."
"Whatever Paris Hilton, Jimmy Fallon and other celebrities promise, buying a fractional link to the JPEG metadata of a picture of a 'bored monkey' wearing funny glasses and a bright hat is an absurd scam, just like investing in pet stones," he concluded.
Tether is a "giant house of cards"
Earlier, a former SEC official had already lashed out at the USDT stablecoin, calling Tether a "giant house of cards." He recalled that Tether operates without regulatory restrictions, since now there is no legal framework governing its activities in the United States. Moreover, US regulators themselves do not know what requirements to set for the issuer.
Stark also questioned Tether's attestation, saying it could not replace auditing. He noted that audits are aimed at identifying potential risks.
